It won’t hurt as much as sticking your finger in a light socket, but assistant professor Allan Davidson is warning students can expect quite a jolt if the province goes through with plans to sell off Ontario Hydro and turn power generation into a private, for-profit enterprise.
Davidson is leading a campaign at U of T to warn students they will be rooting through the receipts and lint in their pockets to try to dredge up enough cash to cover a doubling of electricity costs. It will be a one-two punch, he says, because not only could apartment rental rates rise, but U of T—one of the province’s biggest consumers of electricity—could have to increase tuition or other fees to cover its increasing costs.
Davidson and the Ontario Electricity Coalition say that “as shown by the experience in other jurisdictions where electricity has been deregulated, the price of electricity in Ontario will likely double.”
Ontarians used to get their electricity from Ontario Hydro, which was formed in 1906 to provide electricity at cost in a publicly owned, non-profit system. The Harris government criticized the organization, though, for being inefficient, having high electricity costs and being out of date.
“Do you want to go back to the old days? Over the last 15 years, Ontario Hydro racked up massive debts, which represented more than $10,000 per customer. Ontario Hydro was bankrupt 2.5 times over, with a total debt of $38 billion,” said Mike Krizanc, assistant to Energy Minister Jim Wilson. In 1999, the government broke Ontario Hydro up into different organizations, including Ontario Power Generation (OPG) and Hydro One, of which the latter will be sold off this year. OPG owns and operates the power plants that generate most of the electrical power in Ontario. Hydro One transmits the electricity through the hydro grid.
The OEC is fighting the privatization of the electricity market and what it argues will be the ensuing high electricity rates and large profits for corporations with no public accountability or responsibility.
“It’s the same argument around the world. Public power is cheaper than private power. In the U.S., public power is 18 per cent cheaper. Why would Ontario be different?” asked Paul Kahnert, spokesperson for the OEC. “What is the proof that deregulation works? It hasn’t worked in any jurisdiction in the world.”
The OEC says all Ontario need do is take a look at electricity privatization in California and Alberta to be skeptical of Ontario’s initiative. Blackouts occurred in California last year because of a lack of supply, and electricity prices in Alberta are the second highest in North America and triple the Ontario cost. According to Kahnert, this privatization has implications for U of T because the school is one of Toronto’s 30 biggest electricity users.
U of T is already bracing for higher electricity costs. Bruce Dodds, director of utilities and property management at U of T, says the school is very concerned about this issue. “Estimates that we’ve received indicate [electricity costs] could rise by 30 per cent.”
The net costs for U of T’s electricity use for 2001-2002 was $12.1 million. Dodds says the net cost of electricity for 2002-2003 will be about $17.5 million because of the privatization of the market. “We’ve done as much preparation for this as we can. I hope the price will become lower after a year. But you know it’s hard to judge what will happen.”
Marty England, assistant vice-provost for strategic planning at U of T, says the higher electricity costs is one of the factors that will likely lead to budget cuts of two and a half to three percent for the 2002-2003 fiscal year. “All of the various elements in the university are subjected to upward cost pressures. The huge increase in electricity rates is a real outlier.”
Electricity rate increases are one of the factors contributing to higher tuition rates, so increasing costs mean less chance of a tuition freeze. According to England, all of the university costs are rising more than the permitted tuition rate increases. If the government did not cap these increases, then the university would likely raise tuition by five percent instead of the permitted two percent.
Dodds believes U of T and other universities in the Council of Ontario Universities will make a plea to the government for assistance with higher costs. But Ed Brezina, director of special projects and vice-president of administration at the council, says the council does not have an opinion on the issue, including potential price increases. Krizanc dismisses any warnings of electricity price increases. “Over the longer term, competitive prices will be the lowest and the fairest. Customers will save between $3 billion to $6 billion between the market opening to 2010. He is also dismissive of the OEC’s campaign and its dire predictions. “What drives me nuts is the misinformation that the OEC puts out. It’s out-and-out not true.”
Davidson is not comforted. “Predicting the future is not always a definite thing. If you look at the price of electricity in jurisdictions close to us, the most likely scenario is that prices will double. If New York State is paying twice as much, then we’ll pay twice as much. If a conservative institution like U of T is predicting a 30 percent increase, that’s bad enough. What is the point of this whole deregulation? We’re just throwing ourselves on the open market.”
He plans on forming a group of concerned people at U of T to approach the leaders of different faculties to convince them to speak to the U of T administration. “We’d like the university to say that this is bad. It’s a matter of trying to meet with different leaders to see if they could get in line with us. We’d like to see powerful people at the university to come out and say something publicly or privately. It seems to me if the U of T would say something publicly against it, then the government would listen.”
